The purpose of this paper is to assess fuel choices in the transportation sector under stringent global carbon constraints. Three key questions are asked: (i) when is it cost-effective to carry out the transition away from gasoline/diesel; (ii) to which fuel is it cost-effective to shift; and (iii) in which sector is biomass most cost-effectively used? These questions Lire analyzed using a global energy systems model (GET 1.0), with a transportation module, where vehicle costs (fuel cell, reformer and storage tank), infrastructure and primary energy availability are treated explicitly. The model is run under the assumption that atmospheric concentrations of CO2 should be stabilized at 400 ppm. Three main results emerge: (i) despite the stringent CO2 constraints, oil-based fuels remain dominant in the transportation sector over the next 50 years; and (ii) once a transition towards alternative fuels takes place, the preferred choice of fuel is hydrogen, even if we assume that hydrogen fuel cell vehicles are substantially more costly than methanol fuel cell vehicles. There may, under some circumstances, be a transient period of several decades with a significant share of methanol in the transportation sector. (iii) Biomass is most cost-effectively used in the heat and process heat sectors. If carbon sequestration from biomass is allowed, biomass is primarily used for hydrogen generation since small-scale heat applications are not suitable for carbon sequestration. Detailed sensitivity analyses show that these results are robust with respect to several parameters. Some policy conclusions are drawn. () 2002 Elsevier Science Ltd. All rights reserved.